Obama blames Boehner and House 'extremists' for government shutdown as day three dawns

Obama met with top Republican leaders for an hour on Wednesday, but the talks failed to end the crisis that has sent hundreds of thousands of government workers home.

US House Minority Leader Rep. Nancy Pelosi (D-CA) (L) and US Senate Majority Leader Sen. Harry Reid (D-NV) (R) speak to the media with after a meeting at the White House with US President Barack Obama, Speaker of the House John Boehner and Senate Minority Leader Mitch McConnell about the government shutdown on October 2, 2013 in Washington, D.C. (Win McNamee/AFP/Getty Images)

The United States limped into day three of a government shutdown on Thursday with President Barack Obama warning markets that the crisis could trigger a catastrophic US debt default.

Speaking in Maryland on Thursday morning, Obama firmly placed the blame of the shutdown on Republicans.

Hundreds of thousands of "hard-working Americans" were missing their paychecks, not because of a financial crisis, but because of a "reckless Republican shutdown," he said.

He urged Congress to call a vote, saying the only reason the government remained closed was because House Speaker John Boehner didn't want to anger the "extremists" in the Republican party.

"Call a vote! Put it on the floor and let every individual member of Congress make up their own mind," Obama urged, adding that at least then, the American public would be clear on who was responsible for the shutdown.

A clearly exasperated Obama quoted anonymous tea party Republicans who reportedly said the idea of a government shutdown was "wonderful."

Obama noted that while the sole aim of the Repulican government shutdown was to dismantle the Affordable Care Act, they hadn't even succeeded in that. "The government is now shut down, but the Affordable Care Act is still open."

Obama also mentioned the upcoming issue of raising the debt ceiling, cautioning that as reckless as a government shutdown is, an economic shutdown would be far more damaging.

"There will be no negotiations over this," Obama said, striking a strident note. "The American people are not pawns in some political game."

Boehner reportedly assured colleagues that he was "determined to prevent a federal default," according to The New York Times. A lawmaker, who spoke to The Times anonymously, said Boehner was willing to bring the measure to vote despite it not having a majority of Republican votes.

Watch the Senate floor's negotiations:

Obama met with top Republican leaders for an hour on Wednesday, but the talks failed to end the crisis that has sent hundreds of thousands of government workers home and shut museum sites and national parks throughout the country.

Conservative Republicans want to dismantle or amend Obama's health care law as a condition for approving stop-gap funding for the new fiscal year, which began Tuesday. The president is refusing to tinker with the legislation, his signature health care reform bill widely known as "Obamacare."

Both sides accused the other of refusing to negotiate. There is no end in sight to the latest crisis to hit bitterly divided Washington.

Heightening tensions, Obama sent Wall Street a blunt warning that the political crisis that has paralyzed the federal government could yet trigger a US catastrophic debt default.

But when he met with Boehner and Senate minority leader Mitch McConnell, there was no sign of a breakthrough.

Hundreds of thousands of federal workers are staying home, museums and national parks are shut, much scientific research is on hold and the shutdown is now threatening already sluggish economic growth.

"The president reiterated one more time that he will not negotiate," Boehner said, emerging empty-handed into a warm Washington night to address reporters after the West Wing talks.

On that point at least, the two sides agreed.

Watch House negotiations:

Obama said in an interview with CNBC that he would not negotiate on budget matters until Republicans had passed a bill to reopen the government and raise the $16.7 trillion-dollar US debt ceiling.

The cap must be raised within two weeks or Washington could default on its government debt and payments for the first time, result that could hurt the credit rating of the world's largest economy.

After the talks, Obama's spokesman Jay Carney issued a statement saying that his boss still hoped "common sense" will prevail.

The impasse left the government without a budget for the new fiscal year that started right after at midnight Monday.

Reid emerged from the talks complaining at Boehner's attitude, and vowed never to allow Republicans to overturn the health care law.

"We are locked in tight on Obamacare," Reid said.

In his CNBC interview, Obama challenged his opponents to directly address the already nervous financial community.

This time's different

Obama was asked whether Washington was simply gripped by just the latest in a series of political and fiscal crises which reliably get solved at the last minute.

In unusually frank comments on issues that could sway markets, Obama warned that investors should be worried.

"This time's different. I think they should be concerned," he said.

"When you have a situation in which a faction is willing potentially to default on US government obligations, then we are in trouble."

Obama said he would not negotiate until lawmakers pass a temporary financing bill and raise the debt ceiling, but that after that he would be "prepared to have a reasonable, civil negotiation around a whole slew of issues."

The president warned it would set a terrible precedent to allow lawmakers of any party to hold a White House to ransom over the government's borrowing limit.

"Absolutely I am exasperated, because this is entirely unnecessary," Obama said.

Hopes of an early exit to the shutdown are fading.

"Most of the time you can see an end game," Republican Senator Johnny Isakson told MSNBC. "Right now, there's no end game in sight."

Some signs of incremental movement did emerge, however.

Democrats pledged to appoint negotiators to thrash out a long-term budget -- provided Republicans agree to an immediate six-week federal spending measure with no anti-Obamacare provisions.

Dangerous ground

Earlier, Obama had gathered a group of high flying CEOs, apparently hoping they would pressure Boehner to pass a temporary funding bill.

Goldman Sachs boss Lloyd Blankfein warned that America was on dangerous ground by flirting with not raising the debt ceiling.

A previous period of brinkmanship on the issue badly hit the US credit rating.

"There's a precedent for a government shutdown, there's no precedent for a default," he said after meeting Obama.

The fallout has already caused Obama to shorten his long-planned Asia trip, scrapping stops in Malaysia and the Philippines that were due to begin this weekend, so he could attend to the crisis at home.